December 2017 Dividend Income And Expenses
December is the time of year for food, families, and fun. Oh, and breaks from blogging too! I decided to take the last two weeks of December “off” from blogging, and focus on family this year. It was great to have a break from blogging and my regular stay-at-home-dad routine.
Like last year, we stuck to our usual modus operandi — having a rock-socking fabulous time all-the-while keeping our spending low.
Nobody felt “deprived”, and we all had a very happy set of holidays on a reasonable budget.
Just how reasonable? Read on to find out!
Activities In December
Our first adventure of the holiday was a day-trip to the Museum of Flight in Seattle. My kids are super interested in airplanes and spaceships right now, and the museum has over one hundred on display.
It’s a great museum, and a huge hit with the kids. If you’re ever in the Seattle area, check it out!
Undiscounted adult tickets cost $13, and kids under 5 years (like mine) are free!
It just goes to show (once again), that kids don’t have to be expensive. There’s plenty of opportunities for education and entertainment that’s extremely affordable.
December also included a road trip to Grandma and Grandpa Tako’s house for Christmas. We were lucky enough to see a white Christmas this year!
Snow like this is pretty rare in western Washington, so when you wake-up to white stuff like this…
You just have to take the kids sledding!
Expenses In December
Most people think December is an expensive month — synonymous with Christmas, holiday parties, gifts, big feasts, and plenty of travel. But there’s absolutely NO RULE that says you have to do those things.
The holidays don’t have to be expensive — Just trim the holiday waste! We had a great family Christmas with all of the trimmings, and very little of the waste. December happened to be one of our lowest cost months of the year!
(See our Cumulative Expenses for a comparison)
December expenses amounted to $5,457. Here’s the detailed breakdown:
Food
Food was one of the areas were we spent slightly more than usual in December at $572. We do a little more ‘feasting’ during the holidays, and this showed up in our food budget.
Normally we spend around $500 on food in any given month, so this excess wasn’t terribly excessive. To keep food costs low, I made ample use of coupons at the grocery store.
(Yes, we’re worth over $3 million dollars, and I still use coupons. I even walk to the grocery store to save money. There’s no shame in saving!)
On the not-so-frugal side, I had the opportunity to try out one of those expensive Traeger pellet grills at a family member’s home during the holidays. These unique grills utilize wood pellets for fuel, and can either smoke or bbq food.
They’re pretty expensive grills. For my money, I don’t think they are worth the higher cost unless you’re really into smoking food.
The end result turned out good, but I felt it was a bit drier than just roasting in the oven. The smokey flavor didn’t really permeate the roast very deeply, so I was a little disappointed.
Fuel
Fuel costs amounted to $74 for the month. This is fairly typical for our monthly fuel costs. That $74 covered all of our driving for the month, and included a 240 mile road trip to southern Washington.
Mortgage & Childcare
Mortgage and Childcare expenses were the usual amount for the month at $4,450. These are our two largest monthly expenses, but we consider them entirely optional.
Why? We could eliminate both expenses at any time — We could take the kids out of daycare and keep them home with me (I’d probably have no time to blog), and our mortgage can be paid-off at any time with unused cash.
Time is going to eventually reduce these expenses — Starting next fall, Tako Jr. #1 will start kindergarten. This should free up a metric shit-ton of cash in our monthly budget.
I can feel the savings already!
Utilities & Internet
Utilities and Internet expenses came in at $53 and $49.99 respectively. Our electricity & gas bill was deceptively low this month because we still had a prepaid balance leftover from the Japan trip. Next month will be considerably higher.
Cable internet was our usual $49.99 per month. This is a promotional deal that provides us with 100mbps internet at a great discount. Once the promotion ends, I’ll simply call and get the next promotion. That’s the power of a phone call.
Other
The Other category was fairly large this December at $257. This expense was almost entirely Christmas gifts for family members.
We spent more than I’d like on gifts, but saved where we could — making use of Amazon Prime “free-trial” promotions and Bing Rewards gift cards to save ourselves a little money. (We typically sign-up for the free trials every December)
Mrs. Tako and I tend to give used Christmas gifts to ourselves and the kids, but our other friends and family members aren’t quite as frugal… so we end-up spending a bit more in the “Other” category.
Oh well!
Cumulative Expenses
Cumulative Expenses for the year 2017 amounted to $73,173. The vast majority of that is the cost of our mortgage and the language-immersion daycare where we send the kids (a few days a week).
Without those two expenses, we spent a frugal $20,496 in 2017.
My goal was to keep our core expenses covered by dividend income, and we easily achieved that in 2017. Dividends covered 73% of our total expenses in 2017. The remaining 27% was covered by capital gains and/or Mrs. Tako’s job income.
Dividend Income In December
For the month of December, we collected $10,446 in dividend income. That’s a person best for any one single month (outside of special one-time ultra-huge dividends).
One of my goals for 2017 was to grow our dividend income by 10%. While that doesn’t sound like much, achieving this kind of income growth gets tricky once you start realizing the law of large numbers.
Thankfully, through a combination of new dollars invested and dividend raises, we managed to achieve 10% dividend growth for the year!
We made a total of $53,504 in dividend income for 2017. That’s a Christmas gift I really enjoyed seeing!
Investment Changes In December
Other than some research and reading, I made no changes to our portfolio in December. I was too busy goofing off!
It wasn’t entirely a dead investing month however — the U.S. government decided to make some tax changes that caused HUGE movements in our portfolio.
Remember those Southwest shares I bought back in September? They jumped by 20% in the span of two weeks. My LyondellBasell shares? Gains of roughly 10% in the same time period.
The general hypothesis behind these movements is that the new 21% corporate tax rate (instead of the old 35%) will provide a large boost to earnings. Sounds great in theory, right?
I’m skeptical that it’s going to work out as well as many investors imagine.
Why?
In competitive market systems, changes like this don’t always flow to shareholders. For example, Southwest recently announced that they would be giving all employees a $1,000 bonus because of the tax cuts.
With 55,671 full-time employees, that means Southwest is writing a check for $55.6 million to employees. That’s money shareholders definitely won’t see.
In the air travel industry, larger profits also mean there’s plenty of room to cut ticket prices. It’s a competitive industry with low margins. I wouldn’t be surprised if one airline cuts prices to gain market share, and all airlines follow suit to maintain their own market share…
Effectively erasing the hypothetical benefit of the tax cuts!
Whether you agree or not, it’s worth thinking about before you make any bets on improved profitability.
Regardless of the eventual outcome, many of our stocks rose in December. It was a month of big gains to our net worth. I can’t take any credit for the results of course — Mr. Market did all the hard the work.
I’m just along for the ride.
[Image Credit: Flickr Octopus]
That is amazing…. After your kids go to school the day care will be gone… The day care costs that is…. Not to mention if you eliminate the mortgage payments… Then your cost will be less than $30000 per year… Plus anything you spend on vacations …Michael CPO, From the far side of the planet…
it just proves that basic living hasn’t become that more expensive over the years. That is the competitive market at work for you. Margins on basic stuff are thin and advances in efficiency are at least in part past on to the consumer. I never payed more than 10 euro for a backpack by going to a discount store and just buying from unsold stock form one or 2 years ago. Companies fight over the high margin items all the time thus that is what you see in advertising but basic stuff gets cheaper all the time…
What has gone up a lot is housing, healthcare and schooling, not exactly prime examples of competitive markets and areas that have not been subjected to globalization ..
Thanks Michael! That’s definitely the plan!
Mr Tako, I have to respectfully disagree on the grill comment :). I love my absolutely love my Traeger! We use that device at least once or twice a week. I have the entire neighborhood asking me to cook for them. Hmm, maybe thats why my food bill is so high.
I admit, it’s not particularly great for beef. You need to try pork, chicken, turkey or fish. Through some of that local wild caught salmon or halibut on there. So tasty!
Turning Point Money recently posted…Goals for 2018
Don’t get me wrong, it’s a well built grill! But that price… whew! That and it’s actually fairly easy to smoke in a standard grill too. Less automatic of course.
I dreamed of a white Christmas too! But it didn’t snow in DC until 3 days ago (eh).
I’m glad you had a happy holiday with family. Your grocery budget is to die for!
Happy New Year! 🙂
Thanks Ms. FAF! We eat pretty simply most of the time and I think that helps keep the budget down.
Your core expenses are very manageable! Well done.
Nice dividend income in December! You absolutely killed it there. We broke 9k I our after tax portfolio in Dec and that was an all time monthly record. 2017 full year dividend income was 74.9K so that was solid.
My position was eliminated and I got a severance worth 1.5 years of living expenses so there is a good chance of entering semi-retirement now. It’s a bit tougher than your situation as my spouse doesn’t work and international schools here are very costly.
Very grateful and happy overall!
-Mike
Thanks Mike! Sorry to hear you were ‘eliminated’, but 1.5 years worth of living expenses isn’t too shabby.
Have you considered moving somewhere else to counter the high cost of international schools?
Our December expenses where under control. We did not splurge too much. However, we did have to replace our tires. That set us back by 400$. Our gas bill is a little crazy, thanks to extreme cold conditions.
Sorry to hear about the tires, but nice job keeping expenses under control!
Congrats on another great year. Dividend growth is impressive. I’m totally with you on the coupons and walking!
A good month! We also had a reasonable December and good dividends heading into the new year. We are about 50% covered for 2018 with dividends.
Our biggest expense for 2018 will be healthcare which even after the tax break will be close on $1000 a month.
Yeah, healthcare isn’t cheap. Probably going to be slightly over $1k for us.
Hi, I was just referred to your blog from a friend. Do you list the investments earning dividends to reach your $53K this year on the site? I tried looking but couldn’t specifically find it.
Hi Brandon — I think the post you need to read is here: https://www.mrtakoescapes.com/why-i-dont-share-my-portfolio/
Becoming School-age is one the best things that happens to your expenses, Like becoming potty trained. My next big one is no after school care as soon as my youngest hits an acceptable age.
Yep, it’s going to have a huge impact on our finances. I almost can’t imagine what I’ll do with an extra 2 grand a month. Save it probably!
Another great month Mr. Tako. That museum sounds right up my alley, I go to the Smithsonian Air and Space Museum a couple times a year and it’s free of course.
And congrats on the dividend income for 2017, that’s an impressive number!
Thanks Accidental Fire. If you like the Smithsonian you’ll love the Museum of Flight!
Impressive numbers. I’m very impressed with the expenses when you take out mortgage and childcare. Hopefully the lunch the other day didn’t bump up the Jan expense too much haha. 😉 :p
Haha… shouldn’t be much of a blip compared to our daycare and mortgage costs! 😉
Oh that’s a beautiful smoker! My father in law has a Traeger as well and he taught me how to smoke chicken. Core expenses at $20K not including both mortgage and day care is crazy frugal!
Really? I didn’t think we were that frugal!
We try to be smart about money, but I feel like we waste WAY too much of it.
After spending $250 on Christmas presents (mostly for relatives) I feel like we were practically lighting the $20’s on fire to keep warm!
You guys had a great 2017. Nice job keeping your core expense low.
Will the kids going to public school? That will really help bring down the total expense.
I’m not sold on the Traeger either. If you really like smoking, then get a dedicated smoker like the PCB or something like that.
We had a white Christmas in Portland. It was great because we didn’t have to drive anywhere.
Thanks Joe! Yeah, we’ll send them to public school. It’ll have a huge impact.
It was fun to try out the Traeger, but like you I think it’s way cheaper to get a dedicated smoker or DIY a smoker for your grill.
Happy New Year and congrats on another awesome month! I’m going to have to check out that museum if we’re ever in Seattle.
Thanks FIRECracker! Happy New Year to you guys too!
Where in the world are you guys right now? My sources say Miami, but you could be in Kansas for all I know! 😉
I have never even heard of a Traeger! It looks pretty cool- must be delicious to have smoked meat in the winter time.
Do you do a lot of after school/preschool/daycare activities with the kids? I’m sure these expenses won’t amount to $1000 a month obviously, but they do add up it seems.
Again, amazing dividend income report!
We’re not big into the clubs and for-money ‘activities’. There’s enough free stuff to do in the world for my kids to do — like learning to ride a bike or playing at the local park.
At some point the kids might join a sports team (or something), but I’ll definitely rein in those costs before they become an issue.
When the kids stop going to daycare, what will you do with all that extra money? Decisions! Decisions!
Congrats on the dividend income and maintaining your expenses so low.
Thanks Caroline!
I’m actually a pretty big fan of Traeger. I don’t have one yet but my in laws do and have had plenty of good fixings from it. They are crazy expensive though. I would consider one during the right kind of sale. They recently did a pork loin that was marinated for about 3 days….mmmmm it was tremendous. The kicker being it was -20 degrees outside and it didn’t even take longer than normal to finish.
Reading your childcare expenses is a great form of birth control!
Congrats on your success in 2017 and crossing a HUGE milestone in net worth!
Best wishes in 2018.
-MH
Wow.
10K a month in passive income is the goal I set for my physician friends who ask me for advice. It is an impressive achievement. Most all of us could live quite well on that since it is 2X the average current household income of around $60K
Wow thats fantastic! Great work with your dividend income and keeping your expenses so low! Your total fuel bill is like one tank of gas in Canada…
Never heard of those bbqs. Being a landscaper and doing a bunch of outdoor kitchens, its always surprising what people will pay for a good bbq.
Keep it up, look forward to your January update.
Cheers
Rob @ Passivecanadianincome recently posted…January 2018 – Passive Income
Well done! Question… the 53K in dividends is being generated by what principle? I know you say your net worth is 3M but I think some of that is real estate so I am wondering as a point of reference how much principle is generating 53K in dividends on your end. After following you I asked my financial people to break down my earnings vs. dividends. I learned I generated 58K in dividends in 2017…but my ending principle was 2.5/2.6M…so wondering if you are generating 53K w less than that or more cash… so I can set a reasonable stretch goal for next year.
Many thanks
It was generated with roughly $2 million in taxable assets, but roughly $350k of that is in cash. Hope this answers your question.
Thank you very helpful!
I used to watch videos with my kids many years ago with Tako the octopus. Is that where you picked up the Tako name?
There’s no relation. Tako is the generic Japanese word for octopus.
Hey there, Mr. Tako! Love your blog. Just found out about it from my Rockstar Finance email digest. Have been doing a deep dive on many of your old posts.
One question I have for you is whether you re-invest your dividends or if you’re actually taking distributions to cover your expenses. This might be discussed somewhere, but haven’t seen it yet.
I know you mention your goal is to cover your core expenses with dividend income, but is that just “on paper” and you actually pay for everything out of your $600k+ cash reserves (as of November 2018)?
We regularly take money out of our taxable accounts to pay for our expenses. That just so happens to be where all of our dividends get deposited to, and where our cash reserves sit too.
It all goes into the same pool. So some cash gets “reinvested” and some gets “spent”.
That’s interesting! Based on that, I’m assuming you don’t auto-re-invest into your current positions, instead evaluating where you want to invest over time, at what time, and how much.
My other assumption is that your cash position has kept building up from dividends and other sales, but you keep it there to avoid taxes until you withdraw.
Keep up the great work! Really enjoy your writing style!